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Unemployment Dynamics, Duration and Equilibrium: Evidence from Britain

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  • Simon Burgess
  • H Turon

Abstract

This paper challenges the consensus on the nature of unemployment dynamics in Britain. We show that the argument that changes in unemployment arise mostly from changes in the duration of unemployment (rather than in the chance of becoming unemployed) is flawed. In fact, while shocks to the outflow do have a part to play up to the late 1970s, the huge changes in unemployment over the last two decades have been mostly driven by inflow shocks. Our model also provides a new explanation of aggregate unemployment persistence based on externalities at a market level rather than individual-level persistence.

Suggested Citation

  • Simon Burgess & H Turon, 2000. "Unemployment Dynamics, Duration and Equilibrium: Evidence from Britain," CEP Discussion Papers dp0474, Centre for Economic Performance, LSE.
  • Handle: RePEc:cep:cepdps:dp0474
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Stephen Redding & Mercedes Vera-Martin, 2006. "Factor Endowments and Production in European Regions," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(1), pages 1-32, April.
    2. Daniel Sturm, 2006. "Product standards, trade disputes, and protectionism," Canadian Journal of Economics, Canadian Economics Association, vol. 39(2), pages 564-581, May.
    3. Ponomareva, Natalia & Sheen, Jeffrey, 2013. "Australian labor market dynamics across the ages," Economic Modelling, Elsevier, vol. 35(C), pages 453-463.
    4. Muriel Dejemeppe & Yves Saks, 2002. "A New Light into Regional Unemployment Disparities in Belgium : Longitudinal Analysis of Grouped Duration Data," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2002019, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    5. Burgess, Simon & Profit, Stefan, 2001. "Externalities in the matching of workers and firms in ritain," Labour Economics, Elsevier, vol. 8(3), pages 313-333, June.
    6. Vincenzo Cassino & Michael Joyce, 2003. "Forecasting inflation using labour market indicators," Bank of England working papers 195, Bank of England.
    7. Brian Bell & James Smith, 2002. "On gross worker flows in the United Kingdom: evidence from the Labour Force Survey," Bank of England working papers 160, Bank of England.
    8. Overman, Henry G., 2000. "Neighbourhood effects in small neighbourhoods," LSE Research Online Documents on Economics 20139, London School of Economics and Political Science, LSE Library.
    9. French, Stephen & Kubo, Katsuyuki & Marsden, David, 2000. "Why does performance pay de-motivate: financial incentives versus performance appraisal," LSE Research Online Documents on Economics 3639, London School of Economics and Political Science, LSE Library.
    10. Turon, Helene & Simon Burgess, 2003. "Unemployment equilibrium and on-the-job search," Royal Economic Society Annual Conference 2003 208, Royal Economic Society.
    11. P Willman, 2000. "The Viability of Trade Union Organisation: A Bargaining Unit Analysis," CEP Discussion Papers dp0477, Centre for Economic Performance, LSE.
    12. Stanislaw Gomulka, 2000. "Pension Problems and Reforms in the Czech Republic, Hungary, Poland and Romania," CEP Discussion Papers dp0480, Centre for Economic Performance, LSE.
    13. Stephen Nickell & Patricia Jones & Glenda Quintini, 2002. "A Picture of Job Insecurity Facing British Men," Economic Journal, Royal Economic Society, vol. 112(476), pages 1-27, January.
    14. C Dougherty, 2000. "Numeracy, Literacy and Earnings: Evidence from the National Longitudinal Survey of Youth," CEP Discussion Papers dp0478, Centre for Economic Performance, LSE.
    15. Alan Manning, 2006. "A Generalised Model of Monopsony," Economic Journal, Royal Economic Society, vol. 116(508), pages 84-100, January.
    16. Winter-Ebmer, Rudolf, 2003. "Benefit duration and unemployment entry: A quasi-experiment in Austria," European Economic Review, Elsevier, vol. 47(2), pages 259-273, April.
    17. Duranton, Gilles & Monastiriotis, Vassilis, 2000. "Mind the gaps: the evolution of regional inequalities in the UK, 1982-1997," LSE Research Online Documents on Economics 20135, London School of Economics and Political Science, LSE Library.
    18. Burgess, Simon & Turon, Hélène, 2010. "Worker flows, job flows and unemployment in a matching model," European Economic Review, Elsevier, vol. 54(3), pages 393-408, April.
    19. Manfred W. Keil & Donald Robertson & James Symons, 2001. "Minimum Wages and Employment," Claremont Colleges Working Papers 2001-08, Claremont Colleges.
    20. Di Liberto, Adriana, 2008. "Education and Italian regional development," Economics of Education Review, Elsevier, vol. 27(1), pages 94-107, February.

    More about this item

    Keywords

    Unemployment dynamics; unemployment duration; unemployment flows; nonlinear dynamics; persistence;

    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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